1. Summary of the crash

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From the high price in 2024, Bitcoin has fallen by 11% and Ethereum has fallen by 13%. As for the altcoins that we expect to make a fortune in this bull market, whether they are ten times or several times the target coins, they have fallen by an average of about 50%.

You don’t need to look at the specific currency in the picture below, it’s all red. In the past three months, there is almost no currency that has not fallen.

This is also good news. Compared to seeing others making money, which is more painful than losing money yourself, seeing others not making money is much better than being the only one losing money.

The key point to note is that the decline mainly occurred in the past half month, when CPI has eased and expectations of interest rate cuts have increased by more than ten percentage points. Bitcoin (price drop of 11%) and Ethereum (price drop of 13%) performed relatively well, probably benefiting from some traders converting altcoins into these two currencies, which were also in a difficult situation on June 26.

2. Analysis of the causes of the plunge

First, the old-fashioned delay in interest rate cuts. But the focus of the previous part is that the decline was mainly in the last half month when expectations for interest rate cuts were relatively high.

Second, as is often said, due to insufficient liquidity and a bad environment, project owners are even more unkind and throw away any chips they have. My article "The shamelessness of ZK and L0 reflects the UGLY FACE of the entire VC system and even the blockchain industry" has already conducted an in-depth analysis and will not be repeated here.

And Mr. He seemed to have also seen this problem.

I don’t know if it was after my article “reminded” the boss that he finally came to his senses, or if he was just crying “stop thief” now.

As far as I know, a fixed proportion of projects listed on Binance must be given to Binance, and Binance has been the most active in the past six months, as evidenced by the on-chain indicators. The appearance of the project owners is as ugly as that of the project owners, which can be described as the big cancer in the cryptocurrency circle: VC project owners and large exchanges.

This made me temporarily fall into a quantum expectation of whether to regulate or not. If the exchanges are not regulated, they will play Mahjong well in Japan. If the exchanges are regulated, they will cut leeks in other countries and pay off the debt of 4.7 billion US dollars.

Third, liquidity is drying up.

This is the key point of this article, and it is also the main reason why the market has plummeted despite the recent increase in expectations for interest rate cuts. Everyone has come to their senses. The so-called bull market from last year to March this year was a fake bull market, or a Bitcoin independent bull market.

A large amount of funds and new investors are blocked in ETFs instead of entering exchanges and the cryptocurrency circle. The total number of copycats is shrinking, and in the first half of the year, there were 624 newly issued coins with a circulating market value of more than 20 million US dollars.

If interest rates are not cut, altcoins will certainly not fare much better, because in 2024, there will be a certain amount of new coins (based on 20 million US dollars), and it is estimated that there will be about 800 new coins. If interest rates are cut, altcoins may not be much better, and it depends on whether you choose the right one. The liquidity of altcoins is exhausted, and there are actually some doubts about Bitcoin. In the past 10 days, we have found that ETFs have all had net outflows.

Is this the reason for the decline of Bitcoin? Or is it because the decline of Bitcoin caused the ETF funds to leave the market? It is difficult to say that there is a direct cause and effect between the two, but there is a root cause that cannot be underestimated and is easily overlooked, which is the reason why ETFs have risen in the past six months. Data shows that this is because 30% of the funds are not held by institutions or large investors for long-term to earn cyclical profits, but for stable arbitrage in the medium and short term.

3. How to arbitrage?

Assuming you have a capital of 3 million, can you make 3,000 US dollars a day? With a capital of 3 million, buy 2.7 million spot BTC, and then open a short order of 2.7 million with the remaining amount, ten times the amount. The funding rate is 0.1%, so you can make 3,000 US dollars a day.

Below are Binance’s recent funding rates.

Spot + short orders of the same value can earn the same funding fee as the big pie. Why is the Bitcoin funding fee always positive, sometimes even more than one ten-thousandth, because retail investors are overwhelmed by the expectations of the bull market and are all going long, so the funding rate is given by those who go long to those who go short.

Is there a risk of liquidation? No, the spot and contract are hedged, and the funding fee is free.

However, as June 28 approaches, the funding rate will be largely reduced to zero, and short-term arbitrageurs will naturally leave the ETF market without profit. The funds that leave the market will not come back in the short term unless they gradually enter the next contract trading cycle when the entire market is bullish. Therefore, it is difficult for Bitcoin to protect its own liquidity, let alone protect these small copycats?

4. Why do we say that something big will happen on June 26? We don’t know if the market will change on this day, but if it does, the probability of a fall is greater than an increase. First, as mentioned above, on June 28, arbitrageurs gradually left the market, withdrawing 30% of ETF liquidity. Secondly, Binance was in danger of cooperating with MiCA’s requirements and stopping all users in Europe from using stablecoins such as USDT, which means forced liquidation on this day. Now looking at Binance’s long-short comparison chart, we can clearly see that most of the forced liquidations at that time are long orders, and the long orders are closed in the hope of selling the big cake.

5. Countermeasures

This is a potential black swan. I cannot guarantee that there will be a big drop on that day, but now that you are aware of it, you should respond, even if it is a wrong response.

Before that, if you can take advantage of the rebound in the next two days, liquidate some altcoins and exchange them for stablecoins, you will have oil on hand and don’t have to worry about a crash.

If you are reluctant, just switch to Bitcoin and Ethereum. After all, even if these two brothers plummet again, they will rise again, and will definitely set new highs in the second half of the year.

6. What am I doing after the crash? A friend said that I am dying to make money.

To be frank, after the crash, I felt very upset, but I remained calm.

Because I believe that the market will definitely improve in the second half of the year, and the big explosion will happen next year. Bitcoin will definitely reach more than $100,000, and Ethereum will reach $8,000. Although liquidity was a bit exhausted, in June last year, liquidity was also exhausted, but soon in mid-September, the market began to explode.

The market will recover soon, and funds will find their own way to make money, as long as we hold on to good targets.

What I’ve been doing recently is analyzing on-chain indicators.

I conducted a new systematic analysis of high-quality targets, and updated my understanding based on many factors such as circulation volume, wallet address relationship, fundamentals, track analysis, unlocking cycle, etc.

I deepened my analysis of the blockchain game track. This is a business I firmly believe in. However, I cannot make money easily by just skimming the surface. I have to get involved in it myself, and even started playing games many years later. I want to achieve the professional depth and ecological dimension that if I can't make money in blockchain games, then no one else can make money.

I also did some fund collection and new fund raising. I believe that with the right investment posture, reasonable price range, and a good mentality, all the depression must be preparing for a big explosion in the future. We just need to get through it.

Recently, a friend complained to me that from last year to now, he has been continuously increasing his positions, increasing leverage, and even mortgaging his house. He did some hair pulling, but all his efforts were wiped out. He made inscriptions and his money shrunk by 90%. He bought a copycat and his money shrunk by 80%. He participated in mining, but the machine ran away. He sold some money at a loss for living and immediate debt repayment. His bank card was also frozen for 12,000 yuan. Now he feels that he is only one step away from the rooftop. He is sorry for his family.

He deeply suspected that he was a jinx and nothing he did worked.

I think many readers have a similar mentality, and I even doubted whether I was also unlucky. After continuous setbacks, it is natural to feel depressed.

I analyzed the situation for my friend, but if you think rationally, you will find that this is not your problem, it is the market problem, not your luck problem, but there are some problems with our cognition and choices.

It is a common phenomenon that the whole market is not profitable, not just this friend. If Zhou Xin is replaced by Li Xin or Wang Xin, there is a high probability that they will not make money either.

It’s not that your track is not profitable. Even if you switch from the secondary sector to the primary sector, or even from VC, or even from AI to MEME, there is a high probability that you will not make money.

The main reason for not making money is that the market is not ready, but we are already ready and think that the market will give returns soon.

Apart from the influence of those malignant tumors in the cryptocurrency circle, we can just wipe them out like spider silk. The most important thing is that we have to endure. Funds have their own rules, and blessings will come sooner or later.

The prerequisite is that you must update your cognition, be firm in your dream of wealth, maintain rational target evaluation and position control, and finally, just wait until dawn.

If you are an excellent professional analyst, but your current life has made you embarrassed, if you can continue to produce professionally, don't go out to deliver food, why not come to my place to keep warm. I can't give you much more, but a living guarantee, plus the distribution of stocks for industry research and analysis, I will give you a chicken drumstick and 1 million in this bull market.